ACCG807/FOBE710 Seminar Paper Review Form

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Title of Paper: The Concept of business model scalability
Author(s): Christian Nielsen and morten Lund
Student Surname: poudel

First Name: ashesh (Asis)

Student ID: 43872654

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1. Summary of the paper

This research paper studies about designing the business models which provides
an opportunity for economic growth within a company. To design such a profitable
model, they have used the term Scalability in this research paper. This refers to
economic growth through exponentially increasing return to scale. The term
exponential growth means that the rate of growth is accelerating in each period.
Authors have tried to include examples of companies that constitute a profitable
business model. The authors have tried to associate the business models of these
companies to the identified four scalability dimensions that relate with the
exponential returns to scale.
The research paper starts with introducing readers to the term Scalability and
identifying its attributes in business models. The study moves on with describing the
data collection methods that has been applied in this paper. Then they talk on 5
identified patterns relating to exponentially increasing returns to scale. In later
portions, they make out the 4 scalability dimensions and finally provide a 3 step
roadmap for achieving business model scalability.
All in all, the paper is about introducing the term Scalability in designing
business models and how the managers can use this model for the benefit of their
business.

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Research question:

Based on the research paper carried out by the authors, the research question
is, how do the authors relate scalability to business model configuration? Another
research question is about discussing on the dimensions of scalability in the context of
business models and thereby, creating a roadmap for understanding and analysing
scalability.

Research Methods:
This research paper has used longitudinal action research project of 6 years period.
This project looks after 10 network based business models each comprising at least 5
companies in the model.
Authors have applied longitudinal interventionist type method in studying the
business model innovation process of these companies. Combined with this method
were the non-interventionist type semi-structured interviews that were also conducted.

Results:
The results comprise the identification of scalability dimensions in the business model
context the 3 step roadmap for understanding and analysing the scalability.

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2. Introduction and Motivation

The authors are motivated by the term scalability that can be used in designing
the business models. Scalable business models in the authors term are those business
models which have growth potential and provide exponentially increasing return to
scale.
While the previous studies are focused with designing business models that creates
profitability through value creation and delivery among customers; this research, as
the authors get motivated by, focuses on scalability and how this can be used in
designing business models that in the authors term achieves exponentially increasing
returns to scale.
Research Importance:
The authors have demonstrated the research importance through discussing
this term scalability to business model designs which contributes to providing input
to contemporary understandings of business model patterns and thereby providing
practical insights for the stakeholders of newly created ventures. This research is
important for the business owners, managers and any others associated who are
interested to design their companys business model to be more profitable and give
more output (results) with the same input applied.
I am interested with the use of this term scalability in developing business
models that consider on achieving a sweet-point as described, which gives
exponentially increasing returns to scale for the business and is profitable.

3. LITERATURE REVIEW AND THEORY DEVELOPMENT

While the paper consist not so strong Literate base, the authors have anyway
tried to demonstrate their scholarly ability to identify and outline relevant existing
knowledge through reviewing the term Scalability as used by various authors in

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different contexts. They have reviewed on a scholar who have used the Scalability
definition in IT infrastructure context and stated that it is the ability to handle the
growing amount of work in the system. In addition, the scalability term also refers
to the flexibility of system structure. The authors move further to review literature on
the term flexibility and in addressing the work of other two scholars. They are of the
opinion that flexibility is something that allows for organizational changes as a result
of external events such as new competition, regulation, macro-economic pressures.
Also some internal events such as R&D, loss or gain of core competencies, financial
resources etc allows for organizational changes.
The authors also discuss on applying the concepts of economies of scale and
economics of scope to the study made by another prominent scholar on American
industrial history. He argues on the ways of organizational positioning in relation to
market offering. The authors finally reviewed on scalability effects and talk on
Entrepreneurs dilemma taking the words from Wasserman. They also reviewed
literature on abundance of growth and phase models form organizations.

Gap in Existing Literature (Research Problem)

Existing literature rely on the business models that focus on customer value
creation, how to deliver these values to customers and how strategic partners are
leveraged in this value creation. The understanding of business models centres around
delivering the customers what he/she wants that leads to a profitable business.
This study, however, focuses purely on business model design and to identify
and reach the so called organizational sweet-spot by the authors which is capable of
achieving the cumulative returns/output. The topic of business model scalability tends
to focus more on the alignment of value propositions and strategic partners. This side
of study has not been covered by previous research.

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4. METHOD

This research paper has used longitudinal action research project of 6 years period.
The project looks after 10 network based business models. Each network consisted of
at least 5 companies and altogether 92 companies were included in the process: i.e. to
understand their business models for further innovation.
Authors have applied longitudinal interventionist type method in studying the
business model innovation process in the study. Combined with this method were the
non-interventionist type semi-structured interviews that were also conducted.
Researchers got involved in various workshops, meetings, board meetings, semistructured interviews and observations of the companies that were included in the
networks.
In my opinion, the data collection methods seem relevant with the study as the
authors have used the combination of both interventionist and non-interventionist
method types. Interventionist method is appropriate when a researcher wants to get
first hand data/answer through direct participation/ involvement. However, this
method type lacks a detailed insight into the subject matter and there are cases when a
researcher may miss out an important event in the due-course. Non- interventionist
methods are important to gain structured insight into the subject matter through
formal responses and comments from the participants. However, it is not free from
personal bias and safe-side response of respondents which may alter the research
findings.

5. RESULTS

The authors came out with five patterns relating with the exponential returns to
scale. These patterns illustrate on how the number of companies studied in this paper
were able to re-design their business models.

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They further stated that the identified 5 patterns fall into four dimensions
capable of leveraging exponentially increasing returns to scale. These four
components are listed with enriching value propositions, removing capacity
constraints, creating a platform and changing the role of stakeholders.
Authors with these identified patterns state about how the dimensions of
achieving business model scalability interact with the key attributes identified in the
five patterns.
Finally, the authors propose a 3 step roadmap based on their research with
different companies that tests and designs business model scalability. The first step
explains on the idea of two pathways to business model scalability. The second step
views on configuring the two pathways suggested in step first and the last step details
on analysing scalability attributes.

Consistent with Research question

The result seems consistent to answering the basic research question regarding
the dimensions of scalability in the context of business models and creating a roadmap
for understanding and analysing scalability. The four dimensions of scalability were
identified in the results and the 3 step roadmap was formulated in understanding and
analysing scalability. The results are consistent with the literature and the framework
of Scalability as suggested by the authors which is effective in designing innovative
and profitable business models.

6. DISCUSSION AND CONCLUSION/S

The authors have tried relating scalability to business model configurations. They
have stated their concluding remarks about choosing the most intelligent manner of
configuring the business model that is capable of achieving the most desirable
business place. This refers to the ability of achieving exponentially increasing return
to scale. The authors have suggested the scalability roadmap to structuring business
model innovation process.

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The authors explained that while other research relating to business model
innovation tends to focus on the alignment of value propositions and customer needs,
this research found that the topic of business model scalability tends to focus more on
the alignment of value propositions and strategic partners. This has been shown in the
result segment of the research paper and that way it can be stated that the authors
could clearly relate them to the original research problem.
The authors discuss the research implications through stating the roadmap that
they have proposed be relevant for entrepreneurs who are in the verge of starting new
company and developing business modes. Also the study is relevant to business
managers who strive for innovating, rejuvenating and re-modelling their business.
Also the findings and ideas put in here are relevant to the potential investors and
policy makers as well.

Limitations and Future Research Areas

Researchers have identified on the areas for future research as to focus on
uncovering new configurations with three of the four dimensions identified as
gateways to scalable business models. Except for the component of platform
creations, rest three were found in to lesser extent in the literature. Hence, future
research should be focused on these dimensions as enriching value propositions,
removing capacity constraints and changing role of stakeholders.

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